SAC Capital Advisors could earn the dubious distinction of becoming the first hedge fund charged under a law designed to crack down on the Mafia.

Prosecutors are mulling allegations that SAC is a criminal enterprise under the Racketeer Influenced and Corrupt Organizations Act. Such a move could buy them time: They face a statute-of-limitations deadline to file securities fraud charges against SAC or founder Steven Cohen in July related to the most serious potential accusations against the firm, stemming from its 2008 trading in two pharmaceutical stocks.

RICO would allow prosecutors to level charges related to crimes committed as long as 10 years ago. But such an unprecedented move would likely require approval from the U.S. Justice Department.

Fox Business Network first reported the potential strategy.

SAC and Cohen have repeatedly denied any wrongdoing, despite charges against nine current or former firm employees for insider-trading. In March, it agreed to pay $616 million to settle two such allegations, including that the firm earned $276 million trading on confidential tips about Alzheimer's drug trials acquired by former portfolio manager Mathew Martoma, and believed that it had put an end to its most serious legal issues.

But several weeks ago, a grand jury subpoenaed Cohen and several other SAC executives, indicating that prosecutors were pushing for charges against the hedge fund itself. SAC responded by ending its "unconditional" cooperation with the investigation.

The situation remains fluid: Bloomberg News reported yesterday that Cohen may offer to return SAC's outside capital—about $6 billion of its $15 billion in assets—and turn the legendary hedge fund into a family office in an effort to avoid charges. Other media outlets report that talks between SAC and prosecutors have broken down. And SAC is also reportedly scrambling to avoid another round of huge redemptions next month.

If prosecutors proceed with racketeering allegations, it won't be the first time Cohen has faced this: His ex-wife, Patricia Cohen, filed a racketeering lawsuit against him in 2009, accusing him of insider-trading in 1985 and hiding the $10 million in illicit profits he earned. That case, which SAC calls little more than a shakedown attempt, was recently reinstated.

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